What’s going on here? Wall Street looked mighty beady on the forehead and hot under the collar, after spotting fine print in the US president’s “big, beautiful” tax bill that could scare away foreign investors. What does this mean? Section 899 would let the government impose additional taxes on foreign investors, if their country’s tax policy is deemed “unfair” to the US. Right now, that includes Canada, the UK, France, and Australia. The measure could add an American tax obligation of up to 20 percentage points to those investors’ passive earnings in the US (things like dividends and interest from stateside investments). Unsurprisingly, that could push foreign investors – who currently hold $31 trillion in stateside assets – away from American stocks and bonds. Why should I care? For markets: So much for that whole “safe haven” thing. Foreign institutional investors have long propped up American stock and bond markets, in turn bolstering the US dollar and keeping borrowing costs low. So let’s say Section 899 turns some of them off: the dollar could weaken and long-term interest rates could rise from that alone. And, of course, this is all coming at a time when the “safe haven” status of US assets is already in question. Zooming out: Asian investors were already on their way out. Anxious about tariffs, politics, and currency fluctuations, institutions in Japan, Taiwan, and China have already started retreating from the US. Until recently, Japan invested more money overseas than other country in the world – and while it does hold more international investments than ever before, Germany now has more. Australia’s been straying, too: the country’s biggest pension funds have been looking for safer opportunities outside of the States. So far, all those wandering eyes have found what they’re looking for in Europe and Canada – and at home, too. | 
